UK government backs cryptocurrency projects, starting with ‘an NFT'

UK government backs cryptocurrency projects, starting with ‘an NFT'
Photo Credit: Pixabay
5 Apr, 2022

Officials of the government of the United Kingdom, on Monday, 4 April, spoke about establishing conducive regulations in cryptocurrencies and related technologies, as the nation pushes to attract startups, ventures and real-world use cases of web3 technologies. Alongside establishing regulations that enable investments and projects linked to cryptocurrencies, the UK government seemingly wants to showcase its intent by issuing a non-fungible token (NFT) in the coming months.

The announcement was made by UK chancellor of the exchequer, Rishi Sunak, who issued a directive to the nation’s mint to make the NFT. It is not quite clear as to what this NFT would be, or how it would work and be marketed.

John Glen, economic secretary to the UK treasury, said at the Innovate Finance Global Summit on Monday that the nation seeks to establish a dynamic cryptocurrency regulatory regime, where the laws governing the space would be actively updated and in regular intervals — in order to keep up with the technology and its applications.

The nation also seeks to regulate stablecoins, which are blockchain-based crypto tokens linked to a fiat currency such as the Pound Sterling, Dollar or Rupee. Glen did not touch upon the UK government’s intention to establish a central bank digital currency (CBDC), but instead said that the nation will back stablecoins projects by allowing them in the country’s official payments network.

Glen also affirmed that UK will soon take a call on regulating public crypto token trading — a field that has raised questions and debates across various other nations including India itself. While he did not state what directions such regulations might head towards, UK’s projection of crypto regulations is a largely positive one.

Finally, Glen also spoke about crypto taxation, suggesting that while he doesn’t expect crypto assets to require a completely new definition under the nation’s tax schemes, newer blockchain and crypto technologies such as decentralised finance (DeFi) loans and crypto staking may need closer regulations.

DeFi loans use smart contracts on a blockchain to validate crypto token loans taken by users, while crypto staking refers to the storing of coins in a wallet and earning an interest in return.

UK’s stance unveiled yesterday is in stark contrast to the overall stance taken by India so far. While India is yet to unveil its official cryptocurrency regulation bill, the latter is expected to regulate the open, public trading of crypto tokens closely. Taxes levied on cryptocurrencies have also been shored up, even as the Indian finance minister has suggested that India would most likely not look at imposing a blanket ban on cryptocurrencies.

India is also set to unveil its official CBDC later in 2022, which will coexist alongside the Indian Rupee.